UNDERSTANDING PARTICIPATING WHOLE LIFE INSURANCE

UNDERSTANDING PARTICIPATING WHOLE

LIFE INSURANCE

CLIENT GUIDE

equimax

ABOUT EQUITABLE LIFE OF CANADA

To learn more about Equitable Life and our financial strength, visit equitable.ca/ en/who-we-are

Equitable Life? is proud to be one of Canada's largest mutual life insurance companies. We are owned by our participating policyholders, not shareholders. This allows us to focus on management strategies that foster prudent long-term growth, continuity and stability.

We are dedicated to meeting our commitments to our customers ? to provide good value and meet their needs for insurance protection and wealth accumulation ? now and in the future. That's why Canadians have turned to Equitable Life since 1920 to protect what matters most.

Equitable Life is a focused, stable and strong company. We have sufficient earnings and capital to meet our future growth targets, and we continue to grow steadily. Our growth in sales has been driven by our ability to implement our strategic plan, placing a priority on products, service and execution. Our financial success reflects our continued commitment to profitable growth and our ability to navigate a changing regulatory and economic environment.

Our mutual structure is a key element of our value proposition, along with our diversified product portfolio and superior service. As an organization we're progressive, competitive and firmly committed to serving the best interests of our policyholders, through longer-term strategies that foster ongoing stability, growth and profitability.

What it means to own a participating whole life policy .................................................................... 1 How dividends are calculated ..................................................................................................... 2 A closer look at the participating account....................................................................................... 3 How participating premiums are invested ....................................................................................... 4 Investing for optimum performance of the participating account........................................................... 5 The participating account rate of return .......................................................................................... 6 The dividend scale interest rate .................................................................................................... 7 How the dividend scale responds to market conditions ..................................................................... 8 How dividends impact your policy ............................................................................................... 9 How a dividend scale change impacts your policy .........................................................................10 The mutual difference................................................................................................................ 12

ABOUT THIS GUIDE

This guide provides information to help you understand Equimax? participating whole life insurance, including some key financial facts about the management, performance and strength of Equitable Life's participating account, how dividends are calculated and how they impact your policy. While Equitable Life has made every effort to ensure the accuracy of the information presented here, the policy contract governs in all cases.

EQUIMAX Participating Whole Life

WHAT IT MEANS TO OWN A PARTICIPATING WHOLE LIFE POLICY

Life insurance is a contract between a policy owner and an insurer. When the life insured dies, a sum of money is paid to the named beneficiary.

When you purchase an Equimax participating whole life insurance policy, you benefit from a guaranteed death benefit, cash values and premiums. Those premiums cover benefits and expenses, as well as a contribution to the company's surplus. The remainder flows into the participating account and is invested. You are eligible to participate in the earnings of the participating account through dividend payments.1 Dividends are not guaranteed and are paid at the sole discretion of the Board of Directors. Dividends may be subject to taxation. Dividends will vary based on the actual experience in the participating account. We manage the participating account to ensure there is enough money to meet product guarantees and pay claims and expenses, today and in the future. The Board of Directors determines the amount of the dividend payment to its participating policyholders based on the guidelines in Equitable Life's dividend policy.2

We have credited dividends1 every year since we first launched participating whole life in 1936.

1 YOUR GUIDE TO PARTICIPATING WHOLE LIFE INSURANCE

EQUIMAX Participating Whole Life

HOW DIVIDENDS ARE CALCULATED

To calculate the dividend,1 we look at a number of factors. The participating account is mainly impacted by returns earned on investments and by death benefits, but also other factors such as policy loans, terminated policies, taxes and expenses. Improvements in some of the factors can help to offset declines in others. For example, improvements in mortality (death claims paid) can help offset the impact of declining interest rates on investment performance. Dividend calculations consider the difference between the assumed and actual experience of the participating account. That difference can have a positive or negative impact on the dividend paid.

Premiums

Investment returns and policy loans

Investment performance Investment performance is based on the actual rate of return Equitable Life earns on the participating account. The rate of return goes up and down based on the economy.

Participating policyholders

Dividends

Participating account

Mortality

(Death benefits to beneficiaries)

Taxes, expenses and contribution to

surplus

Lapses and other experiences

Policy loans also contribute to the returns in the participating account and this impact depends on the loan interest rate. The policy loan rates vary by policy series. The current series has a loan rate of 6.2%.

The dividend scale interest rate looks at the returns from investments, excluding policy loans, and smooths out the ups and downs. This rate is blended with the policy loan rate to arrive at the dividend scale interest factor for that series. When this rate of return is higher than expected, impact on dividends is positive. When the rate is lower than expected, impact on dividends is negative.

Mortality and lapse experience

Death claims as well as lapsed policies can impact dividends either positively or negatively depending on the actual experience versus the estimates used for product pricing.

Lapsed policies are those no longer in effect for any reason other than a death claim.

Taxes and expenses

Dividend calculations also consider the difference between the estimated and actual taxes and expenses required to administer the participating block of policies. Change in the taxes and expenses can have a positive or negative impact on dividends.

Tax and expense experience are generally a small factor of the total dividend compared to the investment and mortality experience.

There is a contribution to surplus from the participating account. Income is reinvested to further growth and development. This approach ensures Equitable Life maintains a strong capital base, benefitting both the company and participating policyholders. Our current and projected capital and surplus position is considered in the dividend scale setting process. To learn more about our dividend policy, please visit equitable.ca/en/already-a-client/dividend-information/

YOUR GUIDE TO PARTICIPATING WHOLE LIFE INSURANCE 2

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